Increase Authorized Capital is the way of increasing the limit or amount of capital which has been authorized for use. When a company fees the need to increase its capital, it cannot do it simply in a casual manner. The company has to appeal to the directors or owners for permission to increase the authorized capital.
What needs to be done to increase authorized capital 0f a company?
To increase authorized share capital, the following needs to be followed.
- Provision for increase in Articles of Association: it is a must that the company’s Articles of Association consists a provision for increase in capital. In case, there is no provision, the company has to alter its Articles of Association to include provision and then proceed to increase its capital.
- Call board meeting: the board of directors is to be called for a meeting.
What will be the agenda for holding the general meeting?
The main agenda for the board meeting would be
- To get approval for increase in capital.
- To fix a date, place, time and agenda to hold an Extra ordinary General Meeting (EGM), to pass an ordinary resolution or special resolution, if required and alter share capital clause in the memorandum of association.
- It is also required to approve notice of Extra ordinary General Meeting.
- To authorize the director or company secretary to issue the notice of the Extra ordinary General Meeting as approved.
- Issue notice of the Extra ordinary General Meeting to all members, directors, auditors of the company.
- Holding general meeting (Extra ordinary General Meeting)
- File form SH-7 within 30 days of passing resolution
- After filing, the Registrar of Companies will approve and capital can be increased.
What documents are required for the filing of form SH-7?
- Notice of Extra ordinary General Meeting
- Certified True copy of Ordinary Resolution
- Altered memorandum of association
The time taken for changing authorized capital is generally 25-30 working days.
Cost of vendor ranges between RS. 4000-5000 .